With the current investment, Snapdeal has raised a total of $102 million in funding, however, it’s not clear how it plans to utilize the funds raised. Snapdeal had raised $40 million in a series B funding round from Bessemer Venture Partners, Nexus Venture Partners and Indo-US Venture Partners in July 2011, and subsequently pivoted from being a deals site to an online marketplace model. Marketplaces are in compliance with India’s Foreign Investment rules for E-commerce, since the marketplace doesn’t take ownership of inventory. This is similar to eBay’s B2B model in India, and both companies essentially operate in the same segment. In January 2011, Snapdeal had raised $12 million from Nexus Venture Partners and Indo-US Venture Partners, as part of its second round funding. eBay India, which currently has only about 5 million registered users, has not been able to grow at that faster rate as it would like.

We believe that an outright acquisition of Snapdeal would make more sense for eBay. It could shut it down to eliminate competition, and shift users and vendors to the eBay marketplace. This is what Flipkart did with Letsbuy. eBay’s acquisition of Snapdeal would also make sense for existing investors who would then get an exit.

Recently, a lot of ecommerce sites in India have pivoted to the marketplace model in order to overcome the FDI restrictions. In March 2013, Ladyblush, a women centric ecommerce pivoted to a marketplace model to eventually raise an undisclosed amount of seed funding from Bangkok based VC Fund, Alpha Founders, and a few independent investors.

In February 2013, we had reported that E-commerce major Flipkart is launching a marketplace, and is currently looking to sign up external sellers for the launch of its marketplace. A sign-in page for sellers has gone live at sellers.flipkart.com, and the company is inviting sellers to list their products on Flipkart, and says it will allow for logistics through Flipkart’s partners. Healthkart, online health store selling which has been so far selling only non-prescription medicines recently started selling prescription drugs through its platform Healthkartplus, which is now a marketplace. Infibeam also changed its business model from being a pure e-commerce business to a hybrid venture which will be partly a marketplace and partly an e-commerce retailer.